Showing posts with label Mortgage. Show all posts
Showing posts with label Mortgage. Show all posts
Monday, May 2, 2011
Top 8 things to know about a mortgage
Deciding what type of home loan is best for your needs is an integral part of the home-buying process. But it’s not always easy. Here are the most important factors you should compare when shopping for a mortgage.
1. The principal
Your mortgage principal is simply the amount you are borrowing to buy your house. In other words, it’s the price of your new home minus your down payment. When you shop for a mortgage, each bank will tell you how much it is prepared to lend you based on your income and your credit score. This will help you determine how much house you can afford.
2. The type of mortgage
Traditionally, mortgages fall into two broad categories: Those with a fixed interest rate and those with an adjustable rate. With a fixed rate mortgage, you usually pay the same amount each month for as long as you carry the loan. These mortgages can mean less risk and less worry about the future, but typically have a slightly higher interest rate than the initial rates offered by adjustable rate mortgages. Adjustable rate mortgages (ARMs) usually provide you with a lower initial interest rate, but their rates change with the market, so there is always the risk that your payments will increase.
Lenders also offer other options, some of which combine the features of both traditional mortgage types. Some begin with a fixed rate for three or more years and then convert to an ARM. Others let you choose how much you pay each month. When you discuss these mortgage types, make sure you understand the pros and cons of the loan and that your lender understands both your risk tolerance and your level of financial discipline.
3. The interest rate
Interest rates are the most visible part of any mortgage advertisement, but finding the best deal isn’t as simple as looking for the lowest posted rate. A loan with a lower rate but higher closing costs -- more on those later -- may end up being more expensive. The best way to understand the overall cost of a mortgage is to look at its annual percentage rate (APR), which takes into account the interest rate and the loan’s other costs.
If you choose an adjustable rate mortgage, you also have to understand how your interest rate may change. ARMs are usually adjusted according to an index, which is a published interest rate set by a third party, such as the federal government. The lender then adds a “margin” to determine the interest rate on your loan. For example, if the index is at 5.5 percent and your margin is 1.5 percent, your rate will be 7 percent. Many ARMs have caps to protect you against drastic increases from year to year.
4. The monthly payment
One of the most important things when choosing a mortgage is to make sure you can comfortably afford the monthly payment. However, it’s not enough to simply choose the loan that provides you with the lowest payment. Interest-only mortgages, for example, carry the lowest possible monthly charges, but they do nothing to reduce your principal -- even after years of payments, you’ll still owe as much as you did at the outset. Also, because your payments on an interest-only loan may rise later, you should make sure you can afford the higher payments. In most cases, you’ll want a mortgage that also helps you build equity in your home. (Equity is the market value of your home minus any outstanding mortgages or liens.) If you don’t build equity, you may not be able to refinance if your house decreases in value. And, when you want to move to a new house, you can put the equity of your current home towards the down payment of your next home.
5. The term
The mortgage term is the number of years your loan will be active. Mortgages with shorter terms carry higher monthly payments, but they can save you a lot of interest over the long term. For example, if you borrow $150,000 at 6 percent with a 30-year term, your monthly payment will be $900. The same loan with a 15-year term will cost $1,265 a month, but you’ll pay almost $96,000 less in interest and you’ll own your home twice as fast.
6. Discount points
Lenders may offer you the chance to pay discount points to lower the interest rate of your mortgage. One point is equal to 1 percent of the principal, so on a $150,000 loan, each point costs $1,500. Generally, for each point you purchase you can lower your rate by about 0.25 percent. Whether this is a good deal depends on how long you plan to keep your home -- the longer you plan to stay, the more it makes sense to buy points. The LendingTree Discount points calculator can help you determine if it makes sense to pay points upfront when taking out a mortgage.
Your mortgage principal is simply the amount you are borrowing to buy your house. In other words, it’s the price of your new home minus your down payment. When you shop for a mortgage, each bank will tell you how much it is prepared to lend you based on your income and your credit score. This will help you determine how much house you can afford.
2. The type of mortgage
Traditionally, mortgages fall into two broad categories: Those with a fixed interest rate and those with an adjustable rate. With a fixed rate mortgage, you usually pay the same amount each month for as long as you carry the loan. These mortgages can mean less risk and less worry about the future, but typically have a slightly higher interest rate than the initial rates offered by adjustable rate mortgages. Adjustable rate mortgages (ARMs) usually provide you with a lower initial interest rate, but their rates change with the market, so there is always the risk that your payments will increase.
Lenders also offer other options, some of which combine the features of both traditional mortgage types. Some begin with a fixed rate for three or more years and then convert to an ARM. Others let you choose how much you pay each month. When you discuss these mortgage types, make sure you understand the pros and cons of the loan and that your lender understands both your risk tolerance and your level of financial discipline.
3. The interest rate
Interest rates are the most visible part of any mortgage advertisement, but finding the best deal isn’t as simple as looking for the lowest posted rate. A loan with a lower rate but higher closing costs -- more on those later -- may end up being more expensive. The best way to understand the overall cost of a mortgage is to look at its annual percentage rate (APR), which takes into account the interest rate and the loan’s other costs.
If you choose an adjustable rate mortgage, you also have to understand how your interest rate may change. ARMs are usually adjusted according to an index, which is a published interest rate set by a third party, such as the federal government. The lender then adds a “margin” to determine the interest rate on your loan. For example, if the index is at 5.5 percent and your margin is 1.5 percent, your rate will be 7 percent. Many ARMs have caps to protect you against drastic increases from year to year.
4. The monthly payment
One of the most important things when choosing a mortgage is to make sure you can comfortably afford the monthly payment. However, it’s not enough to simply choose the loan that provides you with the lowest payment. Interest-only mortgages, for example, carry the lowest possible monthly charges, but they do nothing to reduce your principal -- even after years of payments, you’ll still owe as much as you did at the outset. Also, because your payments on an interest-only loan may rise later, you should make sure you can afford the higher payments. In most cases, you’ll want a mortgage that also helps you build equity in your home. (Equity is the market value of your home minus any outstanding mortgages or liens.) If you don’t build equity, you may not be able to refinance if your house decreases in value. And, when you want to move to a new house, you can put the equity of your current home towards the down payment of your next home.
5. The term
The mortgage term is the number of years your loan will be active. Mortgages with shorter terms carry higher monthly payments, but they can save you a lot of interest over the long term. For example, if you borrow $150,000 at 6 percent with a 30-year term, your monthly payment will be $900. The same loan with a 15-year term will cost $1,265 a month, but you’ll pay almost $96,000 less in interest and you’ll own your home twice as fast.
6. Discount points
Lenders may offer you the chance to pay discount points to lower the interest rate of your mortgage. One point is equal to 1 percent of the principal, so on a $150,000 loan, each point costs $1,500. Generally, for each point you purchase you can lower your rate by about 0.25 percent. Whether this is a good deal depends on how long you plan to keep your home -- the longer you plan to stay, the more it makes sense to buy points. The LendingTree Discount points calculator can help you determine if it makes sense to pay points upfront when taking out a mortgage.
7. Lock-ins
When you apply for a mortgage, lenders will quote a specific interest rate and a certain number of discount points. However, the market can change while you are looking for your new home, causing rates to go up or down. That’s why it’s a good idea to ask your lender to lock in these rates for a specified period, often 30 to 60 days. If you want to lock in your rate, ask whether there will be a fee, if it is refundable, and get the agreement in writing.
8. Closing costs
Lenders charge several fees when closing mortgage deals which can add thousands of dollars to your borrowing costs. Depending on the lender and where you live, the fees go by different names and can often be confusing -- origination fees, appraisal fees and prepaid interest are among the terms you may encounter. The best advice is to ask your lender for a good faith estimate of these costs (lenders are required by law to give you one) and ask for an explanation of any charge you do not understand.
When you apply for a mortgage, lenders will quote a specific interest rate and a certain number of discount points. However, the market can change while you are looking for your new home, causing rates to go up or down. That’s why it’s a good idea to ask your lender to lock in these rates for a specified period, often 30 to 60 days. If you want to lock in your rate, ask whether there will be a fee, if it is refundable, and get the agreement in writing.
8. Closing costs
Lenders charge several fees when closing mortgage deals which can add thousands of dollars to your borrowing costs. Depending on the lender and where you live, the fees go by different names and can often be confusing -- origination fees, appraisal fees and prepaid interest are among the terms you may encounter. The best advice is to ask your lender for a good faith estimate of these costs (lenders are required by law to give you one) and ask for an explanation of any charge you do not understand.
Ref: lendingtree.com/mortgage-loans/advice/getting-the-best-loan/things-to-know-about-mortgages/
Thursday, April 28, 2011
How to compare mortgage loans
Comparing mortgage loans is one of the most important things you can do when you’re buying a home. The decisions you make will determine the size of your monthly payments, how much you pay upfront, and how much interest you’ll pay over the life of the loan.
You might find it simpler to compare loans if you ask each lender a series of questions, including:
- What is the loan’s interest rate?
- Will I be charged points?
- What are the closing costs and all other fees?
- What is the annual percentage rate, or APR – the rate you’ll pay per year for all the costs associated with the loan?
- Is there a pre-payment penalty?
- How is the loan amortized, meaning how quickly is the principal paid off?
Find out the answers to these questions no matter what type of loan you’re considering. Each can affect the overall cost of your loan.
If you are considering an adjustable-rate mortgage, or ARM, you can compare loans by asking:
If you are considering an adjustable-rate mortgage, or ARM, you can compare loans by asking:
- When does the rate adjust?
- How often does the rate adjust?
- Is there a cap limiting the amount by which the rate can adjust? What would my monthly payments be if my interest rate hit that cap?
- What is the index and margin that will determine my rate? How has the index changed over time?
ARMs are inherently more risky than fixed-rate mortgages because you’re gambling on whether interest rates will go up or go down before your rate adjusts. Understanding the best- and worst-case scenarios can help you weigh the pros and cons as you compare loans.
But there’s one other big question to consider before you get an ARM:
But there’s one other big question to consider before you get an ARM:
- How does the discount introductory rate compare with rates for 30-year fixed-rate loans?
If there’s not much difference when you compare the two, the fixed-rate loan might be a safer bet. You won’t save much in the short-term, and could save a lot over the long term. Plus, you reduce your risk if interest rates shoot up and you can’t refinance before the rate adjustment.
Finally, to truly compare loans, you have to ask yourself some questions:
Finally, to truly compare loans, you have to ask yourself some questions:
- How long do I expect to stay in my home?
- Are my job and income secure over the long term?
- Will I be able to afford higher payments in the future?
- How comfortable am I with risk?
In the end, the best loan is the one that works for your needs.
Ref: lendingtree.com/mortgage-loans/advice/comparing-mortgage-loans/how-to-compare-mortgage-loans/
Friday, April 22, 2011
5 tips for first-time mortgage borrowers
Shopping for a mortgage can be intimidating. It’s natural to feel anxious about doing something new for the first time, and getting your first mortgage is no exception.
Fortunately, there are a few simple things you can do to make sure you’re being well-prepared before you start looking for your first home loan. Here are five tips to help first-time mortgage borrowers.:
1. Lock Your Interest Rate. Interest rates on mortgages can increase or decrease from day to day or even hour to hour. Discuss the interest rate outlook with your loan officer and try to learn as much as you can about how ups and downs in interest rate quotes might affect your mortgage payment and your ability to qualify for that loan. To protect yourself from interest rate rises, ask about a rate lock, which can reserve a specific interest rate for you for a set time period. If you decide to lock your rate, make sure your lock period won’t expire before your closing date. (Read more about locking your interest rate.)
2. Consider FHA. If you’re a first-time home buyer, you might want to shop for an “FHA loan,” which is a mortgage that’s insured by the Federal Housing Administration (FHA). FHA loans offer competitive interest rates, allow smaller down payments and have easier qualification guidelines compared with other types of loans. The minimum down payment for an FHA loan is just 3.5 percent of the purchase price of the home, although FHA loans do require that you pay mortgage insurance.
3. Take the Tax Credit. If you haven’t owned a home in the past three years, you may be able to qualify for the federal First-Time Home Buyer Tax Credit, which is worth up to $8,000. The credit is refundable, which means you’ll even get a rebate of sorts from the federal government if the income tax that you owe is less than the full amount of the credit. The credit is subject to income limitations and you’ll have to act fast since it’s set to expire after Nov. 30, 2009. Some lenders may allow you to use the credit as a down payment, to pay settlement fees or other closing costs or to pay discount points to reduce the interest rate on your loan.
4. Educate Yourself. A plain-vanilla 30-year or 15-year fixed-rate mortgage is fairly easy to understand. But other types of loans can be more complicated. If you want to consider an adjustable-rate mortgage (ARM) or other less common type of loan product, do your homework and make sure you fully understand how your loan works before you sign the loan documents.
5. Shop Around. Interest rates, loan products and loan terms vary among lenders. That means all borrowers, whether novice or not, should shop around for loan offers. Ask about the benefits and risks of each loan and be sure to compare the quoted points and estimated closing costs as well as the interest rates on different loans before you decide which would best fit your personal situation.
Ref: lendingtree.com/smartborrower/first-time-home-buyers/first-mortgage/first-mortgage/
Thursday, October 8, 2009
Optimal loan size and mortgage rationing
Abstract:
Shows that loan loss expectation plays an important role in determining credit rationing. Shows that the optimal loan size depends on the marginal loan loss, and not on the initial portfolio position of the bank. While an increase in loan administrative costs leads to a larger optimal loan size, restricting the loan size is used to minimize default risks. Also shows that under conditions of uncertainty when default risk is present, and if absolute risk aversion is increasing in wealth, a rise in wealth of the bank will lower the amount of asset to be allocated in risky loans even if credit can be properly priced.
Article URL: http://www.emeraldinsight.com/10.1108/09588689710175024
Monday, October 5, 2009
Bailout Offers Auto Loan Relief
- By: Catherine Brock
- Do you want a piece of the federal bailout action? Now may be your chance. GMAC, the financing unit of General Motors, is passing Troubled Asset Relief (TARP) funds onto its consumers, in the form of looser credit standards on auto loans. There's just one tiny catch-you must buy GM.
- ref: mortgageloan.com/bailout-offers-auto-loan-relief-2835
Wednesday, September 30, 2009
Secure Loan
Published by: Jennifer Quilter
A secure loan will offer you the lowest interest rates and most flexibility from your lender. Of course, these benefits don't come without an added risk from you.
When you borrow money you offer the lender some form of security, also called collateral. The most common type of collateral is your home. This is the only type most banks will take as second mortgages. When you use your home, or vehicle, as collateral you can go on using your property as normal, but sign a note stating that if you don't make the payments the lender can repossess the property and sell it to make up the rest of the money you owe.
If neither of these collateral options work for you there is also the option of using jewelry or other collectible items of value. Not all lenders will do this so you'll need to search around, but it shouldn't be too difficult. You will need to have the item appraised before applying. When you use this form of collateral the lender will typically hold the item in a safe until the secure loan has been repaid in full.
Interest rates are largely determined by the amount of risk the lender is taking. By offering collateral the lender has a way of obtaining their money one way or another, so you have lowered that risk. Of course you have also raised your risk because if you are unable to pay you will lose your property, but because of this risk you are able to enjoy the benefit of a lower interest rate and more flexible terms. If you have bad credit you'll find lenders much more willing to work with you, and if you need to extend the life of your loan they'll be much more willing to work with this.
If you are looking for the best treatment from lenders and need specific things from a lender, you'll have a much easier time doing that with a secure loan.
ref: sooperarticles.com/finance-articles/loans-articles/secure-loan-14025.html
When you borrow money you offer the lender some form of security, also called collateral. The most common type of collateral is your home. This is the only type most banks will take as second mortgages. When you use your home, or vehicle, as collateral you can go on using your property as normal, but sign a note stating that if you don't make the payments the lender can repossess the property and sell it to make up the rest of the money you owe.
If neither of these collateral options work for you there is also the option of using jewelry or other collectible items of value. Not all lenders will do this so you'll need to search around, but it shouldn't be too difficult. You will need to have the item appraised before applying. When you use this form of collateral the lender will typically hold the item in a safe until the secure loan has been repaid in full.
Interest rates are largely determined by the amount of risk the lender is taking. By offering collateral the lender has a way of obtaining their money one way or another, so you have lowered that risk. Of course you have also raised your risk because if you are unable to pay you will lose your property, but because of this risk you are able to enjoy the benefit of a lower interest rate and more flexible terms. If you have bad credit you'll find lenders much more willing to work with you, and if you need to extend the life of your loan they'll be much more willing to work with this.
If you are looking for the best treatment from lenders and need specific things from a lender, you'll have a much easier time doing that with a secure loan.
ref: sooperarticles.com/finance-articles/loans-articles/secure-loan-14025.html
Sunday, September 27, 2009
Auto, Home Loans See Revival: Kamath
Published by: Zameensapna
Credit demand from consumers seemed to be back on track, especially in sectors such as auto and home loans though banks had cut down unsecured loan exposures, said KV Kamath, chairman of ICICI Bank.
"So far as mortgages are concerned, I think they are back from where they were a year ago. The tension between buyer, builder, and the lender is now more or less off. Auto sector financing is also back," Kamath said at the sidelines of a banking seminar. The chairman of the country's largest private sector bank felt 80 per cent of the consumer loans were back, the remaining 20 per cent mostly unsecured loans had taken a back seat.
"Unsecured consumer credit is certainly hit. Banks are not lending unsecured loans," he said. "We at ICICI Bank have significantly slowed down unsecured loans since one year. We only give unsecured loans to few existing clients, which have deposits and a good track record with us," he said while adding that ICICI Bank took the lead in slowing down unsecured loans.
Though home loans have picked up, commercial real estate loan demand is still slack due to excess capacity creation.
The growth of retail credit demand was not reflected in the overall credit growth numbers as a slowdown in working capital demand dragged down the overall numbers, felt Kamath.
"It's not reflected in the numbers because lack of working capital. This loan is distorting the numbers. If we keep the working capital loan aside, lending rate will be healthy by the end of the year," he said while adding that credit growth for 2009-10 was likely to be 29 per cent except the working capital loan.
Credit growth during April 1 to August 14 was only 1 per cent compared with 3.3 per cent a year ago.
He said projects which were in a conception stage a few months back were being implemented now.
On interest rates, he said, "To me, I do not fear interest rates to go up immediately. What the Reserve Bank of India will do if inflation rears up, we think we have to wait for one month for the monetary policy. It may react based on the what is the type of inflation and whether monetary policy action will help or not," he said
ref: sooperarticles.com/finance-articles/loans-articles/auto-home-loans-see-revival-kamath-13083.html
Refinancing calculators
Many online mortgage calculators are designed to calculate the effect of refinancing your mortgage. These calculators usually require information about your current mortgage (such as the remaining principal, interest rate, and years remaining on your mortgage), the new loan that you are considering (such as principal, interest rate, and term), and the upfront or closing costs that you will pay for the loan. Some may ask for your tax rate and the rate of interest you can get on investments (assuming you will invest your savings). Refinance calculators will show the amount you will save compared with the costs you will pay, so that you can determine whether the refinancing offer is right for you. The National Bureau of Economic Research has an example of a refinancing calculator
ref: federalreserve.gov/pubs/refinancings/default.htm
Thursday, September 24, 2009
Are you eligible to refinance?
Determining your eligibility for refinancing is similar to the approval process that you went through with your first mortgage. Your lender will consider your income and assets, credit score, other debts, the current value of the property, and the amount you want to borrow. If your credit score has improved, you may be able to get a loan at a lower rate. On the other hand, if your credit score is lower now than when you got your current mortgage, you may have to pay a higher interest rate on a new loan.
Lenders will look at the amount of the loan you request and the value of your home, determined from an appraisal. If the loan-to-value (LTV) ratio does not fall within their lending guidelines, they may not be willing to make a loan, or may offer you a loan with less-favorable terms than you already have.
If housing prices fall, your home may not be worth as much as you owe on the mortgage. Even if home prices stay the same, if you have a loan that includes negative amortization (when your monthly payment is less than the interest you owe, the unpaid interest is added to the amount you owe), you may owe more on your mortgage than you originally borrowed. If this is the case, it could be difficult for you to refinance.
Lenders will look at the amount of the loan you request and the value of your home, determined from an appraisal. If the loan-to-value (LTV) ratio does not fall within their lending guidelines, they may not be willing to make a loan, or may offer you a loan with less-favorable terms than you already have.
If housing prices fall, your home may not be worth as much as you owe on the mortgage. Even if home prices stay the same, if you have a loan that includes negative amortization (when your monthly payment is less than the interest you owe, the unpaid interest is added to the amount you owe), you may owe more on your mortgage than you originally borrowed. If this is the case, it could be difficult for you to refinance.
ref: federalreserve.gov/pubs/refinancings/default.htm
Adjusting the length of your mortgage
Increase the term of your mortgage: You may want a mortgage with a longer term to reduce the amount that you pay each month. However, this will also increase the length of time you will make mortgage payments and the total amount that you end up paying toward interest.
Decrease the term of your mortgage: Shorter-term mortgages--for example, a 15-year mortgage instead of a 30-year mortgage--generally have lower interest rates. Plus, you pay off your loan sooner, further reducing your total interest costs. The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month.
For example, compare the total interest costs for a fixed-rate loan of $200,000 at 6% for 30 years with a fixed-rate loan at 5.5% for 15 years.
ref: federalreserve.gov/pubs/refinancings/default.htm
FHA Reserves Look Shaky – Is Another Bailout Pending?
The Federal Housing Administration (FHA) once considered one of the safest agencies backing mortgage loans now has many worried that its reserves may have dipped below the Congressionally-required level.
The FHA was designed to help first-time homebuyers and those with less-than-perfect credit. During the housing boom, the popularity of FHA loans waned as the standards and documentation requirements remained high and many other loans required few hoops to jump through. In 2006, FHA loans made less than 3 percent of the all U.S. Mortgage loans. As of the second quarter of 2009, the market share has skyrocketed to 23 percent.
This is largely because the FHA did not suffer the same losses as many other lenders and agencies during the housing bust and became one of the last remaining options for new and lower-income buyers.
Yet as its market share has grown, so has its loan delinquency rates. In June 7.8 percent of FHA-backed loans were 90 days late or more, up from 5.4 percent last year at the same time. And because the FHA requires only a 3.5 percent down payment on its loans, as home values have plunged in the past few years, many FHA borrowers are now underwater in their loans. This situation often leads people to walk away from their monthly payments and give in to foreclosure.
The FHA is required to have reserves that are equal to 2 percent of all the loans it insures. As of last year, the reserves were down to 3 percent, a huge drop from the 6.4 percent it had in 2007.
While FHA officials maintain that the agency will not need a government bailout, that doesn’t keep people from worrying about it based on the numbers. The current value of the FHA’s reserves will be made public on September 30 in the agency’s annual review.
ref: blog.mortgage101.com/2009/09/04/fha-reserves-look-shaky-–-is-another-bailout-pending
Thursday, September 17, 2009
Why consider refinancing?
The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month--lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved. A lower interest rate also may allow you to build equity in your home more quickly.
ref: federalreserve.gov/pubs/refinancings/default.htm
Mortgage Refinancing - What You Need To Know About Refinancing Your Mortgage
by: Anthony Russell
When you go for mortgage refinancing loan you should know the following things in nutshell
Mortgage refinance is like taking second loan to repay your first mortgage loan. Reason to go in for such a loan is that your first mortgage loan tenure is long, and the associated interest rates are very high. Now the interest rates have reduced heavily in the market. Before planning to take a mortgage refinancing loan be careful while doing online research, compare the interest rates and tenures of different lenders, and analyze the best option suitable for you. While taking second loan, do analyze how much cash you can avail after paying your first mortgage loan, which will help you in finishing off other expenses or liabilities you have in hand. Mortgage refinance loan is normally taken to replace the existing loan with a new loan with better terms and conditions as compared to the first one, which can help you save time and concentrate on your career. People basically go for a refinance mortgage loan for few reasons.
# To minimize existing interest rate on their existing mortgage loans, and lowering their monthly mortgage
expenses.
# To get some money out of their mortgage or home loans for a house improvement project, to combine debts and pay them off.
There are other terms you need to consider when you go for refinance mortgage loans. What are the loan types and down payment penalties? It's important to avail refinance loan quotations from lenders and make the correct decisions. The other reasons you may opt for mortgage refinance loan could be to get a sort-term mortgage loan of 10 or 20 years, which will help you to pay off your mortgage loan. You may like to switch from fixed rate mortgage to adjustable rate mortgage loans depending on which one is more beneficial to you. Following mistakes should be avoided while going for home mortgage refinance loan.
# Don't take your county assessor's value as a basis for refinance; try to find out the exact market value which could be higher than the county assessor's value. If you consider the market value, you would get a higher value of mortgage loan which can help you in paying other debts.
# Not providing documentation promptly, can get your loan process delayed, which can result in your loan not being approved at the lower interest rates which you have agreed.
Even if you have a bad credit history you can easily get the bad credit home refinance from us. With a poor credit rating there can be a financial hindrance to many things we do in our life. When you have a bad credit rating you may not be able to buy a car, obtain a credit card, get a student loan, and, in some cases, even get certain jobs. You can, however refinance your home with bad credit mortgage refinance even if you have a bad score. You should normally know what your credit history and the actual score contains. It's recommended you get the reports from all agencies and check the facts, if the reports contain wrong information then get the error corrected with the agencies, and get it rectified before applying for bad credit mortgage refinancing.
When you have bad credit history and you are applying for home mortgage refinance, care should be taken that the interest rates should be very low than the current home mortgage loans. A difference of 0.50 to 1% difference is not enough. There should be a difference of 2 to 3% in interest rates, when you apply for mortgage refinancing loan. Your new mortgage refinance loan interest rates should be lower than the existing ones. This can help you in getting more money in hand, and you can pay off your debts and have enough money in hand for redeeming other liabilities. When going for home mortgage refinance loan with bad credit or bad history be careful that the second mortgage refinance loan you take does not have a clause of pre-payment penalty ranging from 6 month to 2 years. That means if you want to end your home mortgage refinancing loan early, you can't make any pre-payments as it will carry penalties.
You can apply through us for bad credit home refinancing if you have a bad credit history, you can fill our online form and we will get in touch with you as soon as possible to solve your queries.
# To minimize existing interest rate on their existing mortgage loans, and lowering their monthly mortgage
# To get some money out of their mortgage or home loans for a house improvement project, to combine debts and pay them off.
There are other terms you need to consider when you go for refinance mortgage loans. What are the loan types and down payment penalties? It's important to avail refinance loan quotations from lenders and make the correct decisions. The other reasons you may opt for mortgage refinance loan could be to get a sort-term mortgage loan of 10 or 20 years, which will help you to pay off your mortgage loan. You may like to switch from fixed rate mortgage to adjustable rate mortgage loans depending on which one is more beneficial to you. Following mistakes should be avoided while going for home mortgage refinance loan.
# Don't take your county assessor's value as a basis for refinance; try to find out the exact market value which could be higher than the county assessor's value. If you consider the market value, you would get a higher value of mortgage loan which can help you in paying other debts.
# Not providing documentation promptly, can get your loan process delayed, which can result in your loan not being approved at the lower interest rates which you have agreed.
Even if you have a bad credit history you can easily get the bad credit home refinance from us. With a poor credit rating there can be a financial hindrance to many things we do in our life. When you have a bad credit rating you may not be able to buy a car, obtain a credit card, get a student loan, and, in some cases, even get certain jobs. You can, however refinance your home with bad credit mortgage refinance even if you have a bad score. You should normally know what your credit history and the actual score contains. It's recommended you get the reports from all agencies and check the facts, if the reports contain wrong information then get the error corrected with the agencies, and get it rectified before applying for bad credit mortgage refinancing.
When you have bad credit history and you are applying for home mortgage refinance, care should be taken that the interest rates should be very low than the current home mortgage loans. A difference of 0.50 to 1% difference is not enough. There should be a difference of 2 to 3% in interest rates, when you apply for mortgage refinancing loan. Your new mortgage refinance loan interest rates should be lower than the existing ones. This can help you in getting more money in hand, and you can pay off your debts and have enough money in hand for redeeming other liabilities. When going for home mortgage refinance loan with bad credit or bad history be careful that the second mortgage refinance loan you take does not have a clause of pre-payment penalty ranging from 6 month to 2 years. That means if you want to end your home mortgage refinancing loan early, you can't make any pre-payments as it will carry penalties.
You can apply through us for bad credit home refinancing if you have a bad credit history, you can fill our online form and we will get in touch with you as soon as possible to solve your queries.
ref: sooperarticles.com/finance-articles/mortgage-articles/mortgage-refinancing-what-you-need-know-about-refinancing-your-mortgage-7232.html
Money-Back Guaranteed? Maybe or Maybe Not
Have you ever bought a high-ticket item like a TV and then when you are browsing through the Sunday sale ads you see the same exact TV for $300 less? Some stores will allow you to bring the store receipt of your purchase along with the sale ad showing the cheaper price, and as long it has been within 30 days of your purchase, will refund you the price difference.
Some mortgage lenders have the same “price guarantee” offer when it comes to your closing costs. if you can show them that you paid less in closing costs with another lender, they will refund you the difference? You may be asking yourself is this for real? More importantly, you should be asking yourself what is the catch.
First, you have to be able to provide the mortgage lender with a detailed copy of the Good Faith Estimate (GFE) and the Truth-In-Lending (TIL) statement provide to you from the lender that you are using that is beating their pricing. That may not seem too hard, but this also must reach them within a 24-hour period of you receiving it. Again, this is not the end of the world. Usually you receive these items within a few days of applying for the loan. The real catch is that the Good Faith Estimate (GFE) is just that – an estimate. These are not your final costs, nor are these costs set in stone.
Until you can show the lender what your final costs were and are able to prove the total costs were lower than what they were offering you, and then they will not fork over the cost differential to you. Think about it. The time that lapses between you receiving the GFE and TIL and actually closing on the loan could be anywhere from two weeks to a whole month. Do you know how many things could change in the mortgage industry in a 14 to 30-day period that could affect your mortgage costs? The answer is a lot could happen.
So while it may seem like a great idea to earn yourself a little money-back guarantee, it probably isn’t something that you should hang your hat on.
Related Resources
Some mortgage lenders have the same “price guarantee” offer when it comes to your closing costs. if you can show them that you paid less in closing costs with another lender, they will refund you the difference? You may be asking yourself is this for real? More importantly, you should be asking yourself what is the catch.
First, you have to be able to provide the mortgage lender with a detailed copy of the Good Faith Estimate (GFE) and the Truth-In-Lending (TIL) statement provide to you from the lender that you are using that is beating their pricing. That may not seem too hard, but this also must reach them within a 24-hour period of you receiving it. Again, this is not the end of the world. Usually you receive these items within a few days of applying for the loan. The real catch is that the Good Faith Estimate (GFE) is just that – an estimate. These are not your final costs, nor are these costs set in stone.
Until you can show the lender what your final costs were and are able to prove the total costs were lower than what they were offering you, and then they will not fork over the cost differential to you. Think about it. The time that lapses between you receiving the GFE and TIL and actually closing on the loan could be anywhere from two weeks to a whole month. Do you know how many things could change in the mortgage industry in a 14 to 30-day period that could affect your mortgage costs? The answer is a lot could happen.
So while it may seem like a great idea to earn yourself a little money-back guarantee, it probably isn’t something that you should hang your hat on.
Related Resources
- TIL: Truth in Ledning [PDF] (occ.treas.gov)
- GFE: Good faith estimate (wikipedia.org)
Wednesday, September 16, 2009
Have We Just Shifted the Mortgage Debt Burden?
A recent Washington Post article brings up how deeply involved the Federal government has become in the current housing market. In order to keep the mortgage markets from freezing up during the dire days of the housing crash, the government stepped in and took over Fannie Mae and Freddie Mac, two of the nation’s largest mortgage financiers.
“While this made it possible for many borrowers to keep getting loans and helped protect the housing market from further damage, the government’s newly dominant role - nearly 90 percent of all new home loans are funded or guaranteed by taxpayers - has far-reaching consequences for prospective home buyers and taxpayers,” the article says.
And together with guarantees made by the Federal Housing Administration, “The [government] outlay has already reached about $1 trillion over the past year and is rising. During that time, the government has pumped more money into the mortgage market than has been spent on Medicare or Social Security or the defense budget, more even than Washington has paid to bail out banks and other struggling companies.”
And with Treasury and Federal Reserve programs, “all told, the government now stands behind 86 percent of all new home loans, up from about 30 percent just four years ago, according to Inside Mortgage Finance.”
Among the biggest concerns about the government takeover of all these loan guarantees is that many of the loans are looking ripe for default and foreclosure. Fannie and Freddie have lost more than $150 billion since the beginning of 2008 and FHA loan delinquencies are also rising. So, instead of truly curtailing housing market problems, have we simply shifted the responsibility from individual homeowners, lenders, and companies to the American public (taxpayers) at large? So we all go down together instead of just one industry? Or will the Fed just print up some more money to continue bailing out the housing market if things really go south?
ref: blog.mortgage101.com/2009/09/09/have-we-just-shifted-the-mortgage-debt-burden
Tuesday, September 15, 2009
Dubai Mortgage Market
With ever growing prices of property in Dubai, it is becoming increasingly difficult for a normal buyer to pay the entire amount in one go. Mortgage facility comes in handy for such buyers. In mortgage loan, creditor possesses the title of purchased property till the debt amount, along with interest is paid off. In case the debtor fails to repay, creditor can retain the property. In Dubai, mortgage market is all set for an upsurge. Some important features of Dubai mortgage market are discussed below.
Growth Potential:
Dubai mortgage market is on the rise since 2002 but according to the experts and research reports, we still have to witness the real expansion boom. EFG-Hermes has predicted a growth of up to 10 times by 2012 in a recent research report. Dr Sabahuddin Azmi, an Islamic finance expert reaffirmed, while speaking to a summit held by the support of Shaikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah. The growth trend by far has been parallel to real estate market.
Shariah Compliant:
Amlak Finance and Tamweel, the leaders of Dubai mortgage market, with 60% market share collectively, are both shariah compliant. Given that the majority of the Dubai residents are Muslims, and Islam prohibits any kind of interest on loans, shariah compliant lenders are likely to capture the larger market share in future as well. Some people argue that Islamic mortgage is high-priced. The fact is that you may be paying a bigger amount as “down payment” compared to conventional mortgage, but you are also getting a better payment plan afterwards. This is the reason that non-Muslims are also getting increasingly interested in this type of home finance.
Interest Rates:
Interest rate (or profit rate in case of shariah compliant mortgage) is slightly higher when compared to rest of the world, but with competition getting bigger and intense, soon one company or other will be cutting its interest rate to gain competitive advantage over it's competitors. Commercial bank of Dubai has already slashed its interest rates, soon other banks will have to catch up with similar reductions or they will loose their business to CBD in no time.
Dubai real estate market along with its mortgage market is getting larger day by day. With expatriates and foreigners taking more interest in buying property, competition in Dubai mortgage market is heating up. This competition will surely help in resolving issues like processing delays and making it more consumers friendly.
Growth Potential:
Dubai mortgage market is on the rise since 2002 but according to the experts and research reports, we still have to witness the real expansion boom. EFG-Hermes has predicted a growth of up to 10 times by 2012 in a recent research report. Dr Sabahuddin Azmi, an Islamic finance expert reaffirmed, while speaking to a summit held by the support of Shaikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah. The growth trend by far has been parallel to real estate market.
Shariah Compliant:
Amlak Finance and Tamweel, the leaders of Dubai mortgage market, with 60% market share collectively, are both shariah compliant. Given that the majority of the Dubai residents are Muslims, and Islam prohibits any kind of interest on loans, shariah compliant lenders are likely to capture the larger market share in future as well. Some people argue that Islamic mortgage is high-priced. The fact is that you may be paying a bigger amount as “down payment” compared to conventional mortgage, but you are also getting a better payment plan afterwards. This is the reason that non-Muslims are also getting increasingly interested in this type of home finance.
Interest Rates:
Interest rate (or profit rate in case of shariah compliant mortgage) is slightly higher when compared to rest of the world, but with competition getting bigger and intense, soon one company or other will be cutting its interest rate to gain competitive advantage over it's competitors. Commercial bank of Dubai has already slashed its interest rates, soon other banks will have to catch up with similar reductions or they will loose their business to CBD in no time.
Dubai real estate market along with its mortgage market is getting larger day by day. With expatriates and foreigners taking more interest in buying property, competition in Dubai mortgage market is heating up. This competition will surely help in resolving issues like processing delays and making it more consumers friendly.
Article Source:
bestmanagementarticles.com
mortgage.bestmanagementarticles.com
mortgage.bestmanagementarticles.com
The Winners and Losers of the Housing Crash
To say that the current state of the US housing market is a little shaky would be an understatement. The waves of recent mortgage statistics are at best conflicting and in many cases misleading as to the true nature of the property economy. Some experts are clinging to the fact that a recent boom in first time buyers being accepted for mortgages (in light of the $8000 tax credit) is a sign that the industry has turned a corner. Others, meanwhile, see the glimmer of hope as more of a mirage in a still arid housing landscape. Indeed, recent reports show that the Philadelphia Housing Market Index has fallen to its major support level of 225; Toll Brothers (a major US luxury home builder) has seen a 33% drop in order during the second quarter and mortgage lender Ameriquest is downsizing and laying off 3500 workers.
Wealthy Housing Opportunities
In the wake of this uncertain housing climate there has risen a sharp contrast between the poorest and the wealthiest people in the country. The current situation has provided a stark reminder of the money gap between the haves and the have-nots in America. Moreover, where one demographic sees opportunity the other sees long-term financial uncertainty. The old saying “one man’s trash is another man’s treasure” is particularly pertinent at the moment as the rich are seeing the drop in house prices as a chance to increase their portfolios. One of America’s most exclusive housing markets, the Hamptons, felt the bite of the recession more than most with the uptake on many multimillion dollar Long Island properties being extremely low. In recent months though, high-end real estate developers have seen a sharp rise in sales as the price of housing has fallen. Alan Schurman, a real estate developer, points out that those that can afford the million dollar price tags “made a decision that the market hit a point and was forming a bottom. Now they want to get in on the values that are out there.”
Luxury property prices have been slashed by around 20% in the area and this has attracted a glut of buyers back to the area keen to snap up a bargain ready for when the market begins to rejuvenate itself. This flood of multimillion dollar spending provides a striking juxtaposition to the financial difficulties facing many “average income” homes. Across the country the rate of foreclosures has risen and more and more homes are seeking the help of programs like the one in operation in Louisville, designed to be the final lifeline for those facing foreclosure. The number of people struggling to make their mortgage repayments has risen to over 13% and more than 4% of all borrowers are in foreclosure. The rising jobless figures are the major contributing factor to the situation, and while government incentives such as the $8000 tax refund are aiming to help the average buy, the problem is continuing to escalate.
The Great Divide
In times of financial crisis the wealth divide is always more prevalent, and while Middle America struggles to retain possession of its homes; the wealthy can’t wait to expand theirs. Nobody is clear just how much longer the current economic climate will last and for the average American the future isn’t looking like a bed of roses. Recent reports over whether the situation is improving or not is much like the discrepancy between those at the top and bottom of the housing chain; on the one hand someone is a winner but on the other, someone always ends up a loser.
Wealthy Housing Opportunities
In the wake of this uncertain housing climate there has risen a sharp contrast between the poorest and the wealthiest people in the country. The current situation has provided a stark reminder of the money gap between the haves and the have-nots in America. Moreover, where one demographic sees opportunity the other sees long-term financial uncertainty. The old saying “one man’s trash is another man’s treasure” is particularly pertinent at the moment as the rich are seeing the drop in house prices as a chance to increase their portfolios. One of America’s most exclusive housing markets, the Hamptons, felt the bite of the recession more than most with the uptake on many multimillion dollar Long Island properties being extremely low. In recent months though, high-end real estate developers have seen a sharp rise in sales as the price of housing has fallen. Alan Schurman, a real estate developer, points out that those that can afford the million dollar price tags “made a decision that the market hit a point and was forming a bottom. Now they want to get in on the values that are out there.”
Luxury property prices have been slashed by around 20% in the area and this has attracted a glut of buyers back to the area keen to snap up a bargain ready for when the market begins to rejuvenate itself. This flood of multimillion dollar spending provides a striking juxtaposition to the financial difficulties facing many “average income” homes. Across the country the rate of foreclosures has risen and more and more homes are seeking the help of programs like the one in operation in Louisville, designed to be the final lifeline for those facing foreclosure. The number of people struggling to make their mortgage repayments has risen to over 13% and more than 4% of all borrowers are in foreclosure. The rising jobless figures are the major contributing factor to the situation, and while government incentives such as the $8000 tax refund are aiming to help the average buy, the problem is continuing to escalate.
The Great Divide
In times of financial crisis the wealth divide is always more prevalent, and while Middle America struggles to retain possession of its homes; the wealthy can’t wait to expand theirs. Nobody is clear just how much longer the current economic climate will last and for the average American the future isn’t looking like a bed of roses. Recent reports over whether the situation is improving or not is much like the discrepancy between those at the top and bottom of the housing chain; on the one hand someone is a winner but on the other, someone always ends up a loser.
ref: blog.mortgage101.com/2009/09/09/the-winners-and-losers-of-the-housing-crash
Sunday, September 13, 2009
Home Repossession a Cruel Fate
By: Gary Terrazas
Home repossession is one of the worst predicaments fate can throw anyone's way. Yet home repossession is a reality many people are having to live through, what with the current hard financial times which have caused many people to fall behind in their mortgage repayments. Nonetheless, faced with the gloomy prospect of home repossession, one need not throw their hands in the air in despair. There are some steps which one can take, to stop repossession, and save oneself the stresses that come with the forceful eviction which is likely to result from the home repossession, or at least ensure that they get a reasonable (market) price for their house.
Faced with the prospect of home repossession, many people panic, not knowing that there are companies that are established for the specific purpose of helping people in their predicament. These are companies which, approached with a client who is faced with repossession, can buy the house in question on short notice and at the going market prices or near offers. The money you get from selling the house to these sellers can then be used to repay the mortgage balance, and the balance might possibly be enough to pay the deposit on another home, thus saving the home from the sad prospect of destitution. If you can, selling your house to these companies is almost always better than letting it get repossessed. If your house is repossessed, it means that you have essentially sold your home for the balance on your mortgage - or whatever debt might be in question, and this is more likely than not to be a pittance compared to the market value of the house.
You might also consider refinancing your mortgage in a bid to forestall home repossession. If all that has happened is that you have fallen behind in your mortgage repayments, and your credit history is otherwise good, you might be surprised with the ease with which you can get a financier to refinance your mortgage. Of course refinancing the mortgage is just a short-term measure, but it can help you avoid the horrors of home repossession, especially if you (objectively speaking) see your finances improving somewhere in the future. Additionally, refinancing you mortgage is also likely to save you from the ruin to your credit history that letting your mortgaged house get repossessed is likely to cause you.
Then there is the albeit dim possibility of talking with the creditor who is threatening to repossess your home into delaying the repossession. Generally speaking, creditors don't like the messy idea of home repossession and they only do it when the probability of your repaying what you owe them seems very small indeed - which they largely deduce from your attitude. Renegotiating the repayment period with the creditor might just buy you the time you need to put your finances in order, giving you the chance to service your mortgage or whatever debt it might be in time. Even when the prospects seem dark; you can still talk to your creditor and see what they have to say about the possibility of a renegotiated payment. By doing so, you have nothing to lose, and you have a home to possibly spare.
Of course in order to be able to stop repossession through any of these ways, you will have to avoid falling into a panic and get acting instead. Remember, the faster you act, the more options you have, as these things take time. And conversely, the more you delay, the more you cut your options.
Faced with the prospect of home repossession, many people panic, not knowing that there are companies that are established for the specific purpose of helping people in their predicament. These are companies which, approached with a client who is faced with repossession, can buy the house in question on short notice and at the going market prices or near offers. The money you get from selling the house to these sellers can then be used to repay the mortgage balance, and the balance might possibly be enough to pay the deposit on another home, thus saving the home from the sad prospect of destitution. If you can, selling your house to these companies is almost always better than letting it get repossessed. If your house is repossessed, it means that you have essentially sold your home for the balance on your mortgage - or whatever debt might be in question, and this is more likely than not to be a pittance compared to the market value of the house.
You might also consider refinancing your mortgage in a bid to forestall home repossession. If all that has happened is that you have fallen behind in your mortgage repayments, and your credit history is otherwise good, you might be surprised with the ease with which you can get a financier to refinance your mortgage. Of course refinancing the mortgage is just a short-term measure, but it can help you avoid the horrors of home repossession, especially if you (objectively speaking) see your finances improving somewhere in the future. Additionally, refinancing you mortgage is also likely to save you from the ruin to your credit history that letting your mortgaged house get repossessed is likely to cause you.
Then there is the albeit dim possibility of talking with the creditor who is threatening to repossess your home into delaying the repossession. Generally speaking, creditors don't like the messy idea of home repossession and they only do it when the probability of your repaying what you owe them seems very small indeed - which they largely deduce from your attitude. Renegotiating the repayment period with the creditor might just buy you the time you need to put your finances in order, giving you the chance to service your mortgage or whatever debt it might be in time. Even when the prospects seem dark; you can still talk to your creditor and see what they have to say about the possibility of a renegotiated payment. By doing so, you have nothing to lose, and you have a home to possibly spare.
Of course in order to be able to stop repossession through any of these ways, you will have to avoid falling into a panic and get acting instead. Remember, the faster you act, the more options you have, as these things take time. And conversely, the more you delay, the more you cut your options.
Article Source:
bestmanagementarticles.com
mortgage.bestmanagementarticles.com
mortgage.bestmanagementarticles.com
4 Rules of Marketing for FHA Streamline Refinances
by: Scott Tucker
The FHA or Federal Housing Administration has used the FHA Streamline as a primary tool to provide insured mortgages for families to purchase or refinance homes or properties.
The Streamline(K) is a simplified version of the 203(K) to address specifically to smaller needs of individuals in terms of repairing homes and properties. Understanding the features and characteristics will help marketing for FHA Streamline refinances easier and more effective.
Basic Requirements
1. Get The Necessary Items.
The streamline pertains to the amount of underwriting and documentation to be processed by the mortgage company, costs may still be involved. Some of the needed items include the FHA-insured mortgage to be refinanced, current (not delinquent) mortgage to be refinanced, no cash taken out on mortgages refinanced via the streamline refinance process and the refinance leading to a lower borrower's monthly principle and interest payments.
2. Learn How Refinancing Is Offered.
Streamline refinances may be provided by companies differently. Some offer "no cost" refinances which do not require out-of-pocket expenses from the borrower. A higher interest rate on the new loan however, may be charged compared if the borrower paid or financed the closing costs in cash. All closing costs incurred during the transaction are paid by the company with this type of premium.
Closing costs may also be included into the new mortgage amount for some companies marketing for FHA streamline refinances. This is possible if an appraisal confirms that there is sufficient equity in the property. Streamline refinances can be done without the use of appraisals, but the new loan amount cannot go beyond the currently owed amount.
Investment properties or properties which the borrower does not consider as a principal residence can be refinanced without an appraisal required. Closing costs, in effect, may not be included in the new mortgage amount.
The "no cash-out" loan can be used to buy out the equity of an ex-spouse as long as it is documented in the divorce papers. The equity is considered indebtedness. Properties purchased not more than one year ago and are not FHA loans can lead to the amount being the appraised value plus closing cost, or the original sales price plus closing cost.
Searching for Benefits
3. Identify The Advantages.
FHA refinancing programs include repairs completed after closing with loan proceeds. It offers low down payment with a minimum investment of only 3%. Other advantages include loan fees that may be financed, the mortgage being FHA-insured, no inspection required, no general contractor required, being a great tool for REO or Real Estate Owned properties, mortgage amount may be increased when combining Streamline(K) with EEM or Energy Efficiency Mortgage and having a single loan amount for the purchase, refinance and repairs.
FHA streamline is not for purchase transactions only but can also be used for the refinance of an existing loan or purchase or HUD REO property. The owner or homebuyer is responsible for all repairs from the proceeds of the loan. The repairs can start after the loan is closed.
Since the repairs are only minor, a general contractor is not required. You can hire one or perform the tasks yourself, provided you present to the lender your ability to perform the needed refinancing properly. An FHA inspector is not required provided that the homebuyer can show receipts or proof of satisfactory completion.
4. Identify the Necessary Repairs.
Marketing for FHA streamline refinances require you to know the type of items eligible for repairs. Inclusions are replacement or repair of roofs, gutters and downspouts, HVAC system upgrade or repair, plumbing and electrical system repair, replacement or upgrade, repair or replacement of existing flooring, minor remodelling, exterior and interior painting, weatherization like storm doors and windows and insulation, appliances not exceeding $2,000 in total after the required minimum of $3,000 of eligible items for repair are satisfied, non-structural improvements for disabled person accessibility and basements and exterior decks.
Items that require structural modification or major rehabilitation are not included. If major repairs are needed, the homebuyer should opt for the regular FHA 203(k) program. A maximum of 2 payments may be made to the homeowner or contractor during refinancing.
Any FHA-approved lender can process the mortgage loan.
Most of the loan fees like title update costs, permit costs and origination can be financed in to the loan. Always point these out when marketing for FHA streamline refinances.
The Streamline(K) is a simplified version of the 203(K) to address specifically to smaller needs of individuals in terms of repairing homes and properties. Understanding the features and characteristics will help marketing for FHA Streamline refinances easier and more effective.
Basic Requirements
1. Get The Necessary Items.
The streamline pertains to the amount of underwriting and documentation to be processed by the mortgage company, costs may still be involved. Some of the needed items include the FHA-insured mortgage to be refinanced, current (not delinquent) mortgage to be refinanced, no cash taken out on mortgages refinanced via the streamline refinance process and the refinance leading to a lower borrower's monthly principle and interest payments.
2. Learn How Refinancing Is Offered.
Streamline refinances may be provided by companies differently. Some offer "no cost" refinances which do not require out-of-pocket expenses from the borrower. A higher interest rate on the new loan however, may be charged compared if the borrower paid or financed the closing costs in cash. All closing costs incurred during the transaction are paid by the company with this type of premium.
Closing costs may also be included into the new mortgage amount for some companies marketing for FHA streamline refinances. This is possible if an appraisal confirms that there is sufficient equity in the property. Streamline refinances can be done without the use of appraisals, but the new loan amount cannot go beyond the currently owed amount.
Investment properties or properties which the borrower does not consider as a principal residence can be refinanced without an appraisal required. Closing costs, in effect, may not be included in the new mortgage amount.
The "no cash-out" loan can be used to buy out the equity of an ex-spouse as long as it is documented in the divorce papers. The equity is considered indebtedness. Properties purchased not more than one year ago and are not FHA loans can lead to the amount being the appraised value plus closing cost, or the original sales price plus closing cost.
Searching for Benefits
3. Identify The Advantages.
FHA refinancing programs include repairs completed after closing with loan proceeds. It offers low down payment with a minimum investment of only 3%. Other advantages include loan fees that may be financed, the mortgage being FHA-insured, no inspection required, no general contractor required, being a great tool for REO or Real Estate Owned properties, mortgage amount may be increased when combining Streamline(K) with EEM or Energy Efficiency Mortgage and having a single loan amount for the purchase, refinance and repairs.
FHA streamline is not for purchase transactions only but can also be used for the refinance of an existing loan or purchase or HUD REO property. The owner or homebuyer is responsible for all repairs from the proceeds of the loan. The repairs can start after the loan is closed.
Since the repairs are only minor, a general contractor is not required. You can hire one or perform the tasks yourself, provided you present to the lender your ability to perform the needed refinancing properly. An FHA inspector is not required provided that the homebuyer can show receipts or proof of satisfactory completion.
4. Identify the Necessary Repairs.
Marketing for FHA streamline refinances require you to know the type of items eligible for repairs. Inclusions are replacement or repair of roofs, gutters and downspouts, HVAC system upgrade or repair, plumbing and electrical system repair, replacement or upgrade, repair or replacement of existing flooring, minor remodelling, exterior and interior painting, weatherization like storm doors and windows and insulation, appliances not exceeding $2,000 in total after the required minimum of $3,000 of eligible items for repair are satisfied, non-structural improvements for disabled person accessibility and basements and exterior decks.
Items that require structural modification or major rehabilitation are not included. If major repairs are needed, the homebuyer should opt for the regular FHA 203(k) program. A maximum of 2 payments may be made to the homeowner or contractor during refinancing.
Any FHA-approved lender can process the mortgage loan.
Most of the loan fees like title update costs, permit costs and origination can be financed in to the loan. Always point these out when marketing for FHA streamline refinances.
Article Source:
bestmanagementarticles.com
mortgage.bestmanagementarticles.com
mortgage.bestmanagementarticles.com
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